Family Dollar share price up, shareholders approve Dollar Tree merger

Family Dollars shareholders accepted a merger offer from fellow discount retailer Dollar Tree, ending a six-month bid war with the market leader Dollar General.

Outstanding shares that voted in favor of the merger offer were 74% of Family Dollars 114 million as of last October, the company announced on Thursday at an investor meeting in Charlotte, North Carolina.

Family Dollars shareholders agreed to the $77.05-per-share offer from its smaller competitor, after the companys board issued a letter to encourage them to vote in favor of the deal with Dollar Tree earlier this month.

At that time Dollar Tree said it would drop its offer if any more delays occur. Family Dollars shareholders have pushed back the vote twice, hoping that the Federal Trade Commission would provide some insights on whether it will approve Dollar Generals higher offer.

Initially Dollar Tree approached Family Dollar with a merger offer last summer, three weeks later the largest discount retailer in the US interfered and proposed a $80-per-share deal to Family Dollar.

The scenario of merging the two biggest discount retails seemed unlikely to get an approval from the FTC and Family Dollar rejected the bid. However, Dollar General took its offer directly to the companys shareholders.

During negotiations, Dollar General said it was ready to divest as much as 1 500 stores in order to get the green light from the FTC. However, Dollar Tree did not agree with that estimate and said the FTC would require a higher number of divestitures.

Meanwhile, Dollar Tree said it expects to sell 300 or less stores in order to get antitrust clearance.

“We look forward to completing the transaction with Dollar Tree and remain excited about the opportunity that this combination will create,” said Family Dollars Chief Executive Officer Howard Levine.

The merger between Dollar Tree and Family Dollar would create the biggest discount retailer in US, with more that 12 000 stores. The deal still needs to be approved by the FTC and is expected to be completed by March at the earliest.

Family Dollar edged up 1.18% and closed at $76.44 in New York, marking a one-year increase 18.04%. The company is valued at $8.75 billion.

According to the Financial Times, the 17 analysts offering 12-month price targets for Family Dollar have a median target of $76.00, with a high estimate of $80.00 and a low estimate of $52.00. The median estimate represents a 0.58 % decrease from the last close price.